RBS issues global stock and credit crash alert

The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.

"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist.

A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.

Such a slide on world bourses would amount to one of the worst bear markets over the last century.

RBS said the iTraxx index of high-grade corporate bonds could soar to 130/150 while the "Crossover" index of lower grade corporate bonds could reach 650/700 in a renewed bout of panic on the debt markets.

"I do not think I can be much blunter. If you have to be in credit, focus on quality, short durations, non-cyclical defensive names.

"Cash is the key safe haven. This is about not losing your money, and not losing your job," said Mr Janjuah, who became a City star after his grim warnings last year about the credit crisis proved all too accurate.

RBS expects Wall Street to rally a little further into early July before short-lived momentum from America's fiscal boost begins to fizzle out, and the delayed effects of the oil spike inflict their damage.

"Globalisation was always going to risk putting G7 bankers into a dangerous corner at some point. We have got to that point," he said.

US Federal Reserve and the European Central Bank both face a Hobson's choice as workers start to lose their jobs in earnest and lenders cut off credit.

The authorities cannot respond with easy money because oil and food costs continue to push headline inflation to levels that are unsettling the markets. "The ugly spoiler is that we may need to see much lower global growth in order to get lower inflation," he said.

"The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets," he said.

Kit Jukes, RBS's head of debt markets, said Europe would not be immune. "Economic weakness is spreading and the latest data on consumer demand and confidence are dire. The ECB is hell-bent on raising rates.

"The political fall-out could be substantial as finance ministers from the weaker economies rail at the ECB. Wider spreads between the German Bunds and peripheral markets seem assured," he said.

Ultimately, the bank expects the oil price spike to subside as the more powerful force of debt deflation takes hold next year.

Source: Telegraph.co.uk

Morgan Stanley warns of 'catastrophic event' as ECB fights Federal Reserve

Soros predicts worst recession for 50 years

Amid collapsing stock prices worldwide, the billionaire investor George Soros has told an Austrian daily, the Standard, that the United States is threatened with recession and the world is facing the worst financial crisis in half a century. "The situation is much more serious than any other financial crisis since the end of World War II," Soros was quoted as saying.

He said over the past few years politics had been guided by some basic misunderstandings stemming from something that he called "market fundamentalism" - the belief that financial markets tended to act as a balance. "This is the wrong idea," he said. "We really do have a serious financial crisis now."

He added he was surprised how little it was understood that a US recession was also a threat to Europe. European shares duly fell nearly six per cent on Monday, their biggest one-day slide since 9/11.

Meanwhile in Mumbai, some market analysts are suggesting Soros shorted the Indian markets last week. Over 15 years after he shorted the British pound in September 1992 and earned one billion dollars, local market sources say one of Soros's funds may have shorted the Nifty last week.

Source: thefirstpost.co.uk

Soros Sees End of Dollar as World's Reserve Currency
Bloomberg.com

Global shares tumble on US fears
News.bbc.co.uk

Other news: news.independent.co.uk

Rumours of Impending Crash

They said this is the "setup" time for an eventual collapse. The problems of 2 weeks ago was generated by only a tiny % of defaults but THEIR NEW MODELS PROJECT SEVENTY PERCENT of all subprime loans will eventually foreclose in the next 12 or so months. 70%

The hardest hit states are expected to be in the South, and MI and CA.

October is the next month for major adjustments in subprimes, and you should expect trouble. If they go up, teetering foreclosures will skyrocket into failure. The Fed's promise to do what is needed won't work because they won't bail out what is needed.

They said what America has to come to realize is that "Wall St." as we know it is over, a new system must result, and if steps are not taken, a severe crash is UNAVOIDABLE that FORCES a new system. The old system CANNOT be carried much longer.

Here is what else I am hearing as well. The problem is CATASTROPHIC in their words, but things will glide for a few weeks until October and later with the new adjustments.

The public WILL NOT HEAR MUCH IN THE NEWS, JUST LIKE THE 20's WHEN ALL WAS FINE IN THE NEWSPAPERS THE DAY BEFORE THE CRASH AND YET COLLAPSED THE NEXT DAY. PEOPLE MUST NOT BE ALLOWED TO STAGE A RUN ON THE BANKS. Don't look to news for verification. Common sense.

Store food, water and cash and get into metals, and see NESARA. What does it say when Bill Gates, the wealthiest man, now owns 30% of all silver in the world and billions in Euro's and in public said the dollar is going down (MSNBC)? He is not alone, most of the wealthiest have similarly prepared in different ways offshore.

Fortunately the new Treasury Bank system has been ready for years but blocked, but I guess we have to endure the worse before the best before the thousands of thugs in government and multinational companies are ousted. You have time now to protect yourself as best possible in the next few weeks. It will happen, but during the changeover banks and ATM's will not work temporarily!!! Be prepared now!!

Other Source: Telegraph.co.uk

Billions in 'put options' betting the market will loose 30-50% by September 21st 2007

The entity or individual offering these sales can only make money if the market drops 30%-50% within the next four weeks. If the market does not drop, the entity or individual involved stands to lose over $1 billion just for engaging in these contracts!
Clearly, someone knows something big is going to happen BEFORE the options expire on Sept. 21.

THEORIES:

The following theories are being discussed widely within the stock and options markets today regarding the enormous and very unusual activity reported above and two stories below. Those theories are:

1) A massive terrorist attack is going to take place before Sept. 21 to tank the markets.
2) China, reeling over losing $10 Billion in bad loans to the sub-prime mortgage collapse presently taking place, is going to dump US currency and tank all of Capitalism with a Communist financial revolution.

Either scenario is bad and the clock is ticking. The drop-dead date of these contracts is September 21. Whatever is going to happen MUST take place between now and then or the folks involved in these contracts will lose over $1 billion for having engaged in this activity.

Source: anomalicresearch.com